An elusive insurance fraud could not only leave you out of pocket, but also result in you receiving six points on your licence.
‘Ghost’ insurance scams, also known as ghost broking, is a scam that primarily trick motorists into paying for a car insurance policy that does not actually exist. It is understood that adverts on social media, typically promoting these scams, target younger drivers who are more likely to pay higher insurance premiums on legitimate policies.
As a result, ghost insurance scams usually lure victims by promising exceptionally cheap insurance. In many instances, those who purchase a ghost insurance will even provide an insurance policy number and documents. However, these are usually counterfeits.
Some ghost insurance scams may enrol victims in a legitimate insurance policy, but extensively lie about the victim’s details to the insurance provider without their knowledge. This means that while the victim technically has an insurance policy, they are not genuinely covered by it as the details are not accurate.
While victims of these scams may lose a significant amount of money, they could also find themselves in trouble with the police.
In the UK, it is unlawful to operate a vehicle without possessing at least third-party insurance from a legitimate insurance provider. If an individual takes out a ghost insurance policy, they will still be subjected to the same penalties as driving without insurance, even if they were unaware the insurance was illegitimate.
Driving uninsured can result in a fixed penalty of £300 and six penalty points. However, if the case is escalated to court, the driver could face an unlimited fine and may even be banned from driving.
Warning signs to look out for
When purchasing a new insurance policy, you should check to see whether the insurance provider is legitimate. One easy way to do this is to see if the provider is registered with the FInancial Conduct Authority (FCA).
The FCA register contains a list of all legitimate financial services in the UK, including insurance providers. Typically, the insurance provider will have their own unique register number with the FCA.
For example, Admiral Insurance’s number is 219824 while Hastings Direct’s number is 969197. The Motor Insurance Database (MID) also allows drivers to check whether their vehicle has an insurance policy in place..